Savings&Mortgage or No Savings&No Mortgage

[amorris311]

Thank you Morris and ATN. Y'all both provided great advice for me. (I hope Doug is not right about taking financial advice from a Pilot)

Do what you think is best for you. Everyone is different and has different needs. Like flying, make sure you leave yourself an out. There is always something that will happen that can cripple you financially if you do not take care of the little things and leave yourself an out.

 

[SlumTodd_Millionaire]

Like flying, make sure you leave yourself an out. There is always something that will happen that can cripple you financially if you do not take care of the little things and leave yourself an out.

Always good advice.

"If you were to distill the secret of sound investment into three words, we venture the motto, MARGIN OF SAFETY." - Benjamin Graham (Warren Buffett's mentor)

 

[Cessnaflyer]

How do you guys treat loan payments? I was talking to some investors and they were mixed on how they treated payments. Some said pay them off as quickly as possible and others said if you were sub 3.5% interest to pay the minimum plus a very small amount because investments will out pace the interest.

 

[SlumTodd_Millionaire]

How do you guys treat loan payments? I was talking to some investors and they were mixed on how they treated payments. Some said pay them off as quickly as possible and others said if you were sub 3.5% interest to pay the minimum plus a very small amount because investments will out pace the interest.

I agree with the latter. With low interest rates, there is no reason to pay off the loans. BUT, that assumes that you would take the money that you would use to pay down the loan and instead invest it. You have to be disciplined about it.

 

[TallFlyer]

It's just the term. I guess I'm not up on the new age terminology. Financial coach, life coach, career coach, etc. I find the term hokey, is all. And I'm not sure about the financial wherewithal of somebody who needs to pay somebody else to chart them out of financially treacherous waters.

Yes, because everyone has come out of the womb automatically knowing how to do this stuff so why would anyone ever need any help?

I mean, I'm sure you and Todd both just walked out to an airplane one day with zero time and after your checkride the examiner was so impressed with you that he just gave you both your ATPs on the spot.

 

[SlumTodd_Millionaire]

Um, yeah, I learned about finances by reading. I didn't need a "coach" for it.

 

[TallFlyer]

Well good for you. That's certainly one avenue of learning. There are others, and if people want to refer to themselves as coaches who cares?

Point is, as you certainly agree with based on some of your comments, there is a very wide range of financial literacy in this country, with most people's knowledge being solely based off the latest credit card commercial. Some of those folks end up in such a mess with so many moving pieces that it helps them to have someone along side prioritizing their efforts when the "American Dream" that's been sold to them doesn't quite work out as advertised.

 

[SlumTodd_Millionaire]

The problem that I have with it is that most of the people who call themselves financial "coaches" or "gurus" are conmen who are charging exorbitant fees for their advice. And in the case of guys like Ramsey, the advice that they provide defies grade school level math.

 

[Ian_J]

Um, yeah, I learned about finances by reading. I didn't need a "coach" for it.

Just like diet and exercise. No one needs motivation or coaching. Just read a book and do it!

 

[TallFlyer]

Well, Ramsey himself would be the first to tell you that his approach has more to do with changing behavior than math. If the common man were looking at all the math to begin with they wouldn't have gotten themselves in the situations the cause them to look at some like Ramsey as a godsend. And all Ramsey is really doing is providing folks with a plan to get to a "margin of safety" whereas before they had none.

Point being, some people are private pilots flying 172s, some ATPs flying 777s. They're all pilots, and each can be successful in their own little box. Sure, the 777 guy's box is a little bigger and he's got more tools in his toolbox, but that doesn't mean the 172 guy isn't a success.

 

[Ian_J]

And in the case of guys like Ramsey, the advice that they provide defies grade school level math.

If only financially illiterate people would read a book, get into some leverage investing, while just simply stopping their over-spending and love of consumer debt.

 

[SlumTodd_Millionaire]

Well, Ramsey himself would be the first to tell you that his approach has more to do with changing behavior than math.

Which can be done without ignoring the math.

If the common man were looking at all the math to begin with they wouldn't have gotten themselves in the situations the cause them to look at some like Ramsey as a godsend. And all Ramsey is really doing is providing folks with a plan to get to a "margin of safety" whereas before they had none.

Ramsey is actually reducing their margin of safety, because he's drastically extending the amount of time that they remain in debt. By presenting people with the facts and the math, he could help them get out of high interest debt more quickly, increasing their margin of safety. He has an incredible skill for speaking in plain language about complicated topics and holding people's interest. It's a shame that he doesn't use those skills to teach people the right things.

 

[Ian_J]

Todd, he's figured out something you haven't and never will.

 

[SlumTodd_Millionaire]

Todd, he's figured out something you haven't and never will.

And what exactly is that? Are you actually going to contribute something to the forum for once instead of just making smart-ass remarks?

 

[Ian_J]

And what exactly is that? Are you actually going to contribute something to the forum for once instead of just making smart-ass remarks?

You don't think I contribute to the forum?

 

[TallFlyer]

Which can be done without ignoring the math.

True, but the majority of Americans aren't all that good at math. Neither are they Vulcans. There is going to be emotion involved in the process and giving people small victories on the way to ultimate success (however you want to define that) is only going to reinforce positive behavior. Again, no one on this board went from 0 time to ATP in a day.

Ramsey is actually reducing their margin of safety, because he's drastically extending the amount of time that they remain in debt. By presenting people with the facts and the math, he could help them get out of high interest debt more quickly, increasing their margin of safety.

Well, "drastically" depends on the financial situation of the individual borrower and how their debt is structured. And yes, you can come up with a plan in a lot of cases that pays down debt faster for less money, but that doesn't mean it works for most people. Again, if this was strictly about math we wouldn't be having this problem in the first place.

Link

 

[SlumTodd_Millionaire]

You don't think I contribute to the forum?

Lately? Not that I've seen. Your sole purpose seems to be making smartassed remarks to people you don't particularly care for.

And you didn't answer the question. Another failure to contribute.

 

[TallFlyer]

Lately? Not that I've seen. Your sole purpose seems to be making smartassed remarks to people you don't particularly care for.

While I do think you're one of the more well thought out guys on this forum in many ways I feel compelled to say this:

Irony. You have it.

 

[SlumTodd_Millionaire]

While I do think you're one of the more well thought out guys on this forum in many ways I feel compelled to say thiss:

Irony. You have it.

Just looking at this thread, it's pretty clear that there is no irony. Quite a bit contributed. Sure, some smartassed comments mixed in for good measure.

 

[TallFlyer]

All that I would agree with, but what I think Ian was referring to (about what you don't get and never will) is that the majority of Americans don't really have the ability to accelerate their financial literacy from zero to sixty in two seconds and then just keep going......

The genius of the Ramsey method is that folks can spend a minimal amount of time doing it to begin with, get their head wrapped around their finances in a way that they hadn't conceived of before, increase their short term savings and margin of safety, then build from there if they so choose.

You seem to hold a measure of contempt for people that aren't willing to do steps 1 through 27 in the next five minutes and leverage every bit of their credit for supposed growth in the equities market when leveraging every bit of their credit is what got them into trouble in the first place.